tv Bloomberg Markets European Close Bloomberg December 20, 2016 11:00am-12:01pm EST
mark: we are going to take you from new york to london and milan in the next hour. this is what we are watching today. the u.k. prime minister is speaking before the liaison committee saying exit missionary is working well and the u.k. will meet the article 50 timetable. julie: shares are falling for a second day. they are said to be not luring investors. hour, we will be speaking to the blackberry ceo about his temper his latest earnings. they are boosting the profit forecast as the shift to software looks to be paying off. let's have a look at where european equities are trading. we're 30 minutes away from the
end of the two-day session. despite theising geopolitical setbacks we have last 24europe in the hours. the stoxx 600 is the highest level since december last year. look at all of the currencies sliding against the dollar today. the euro is down. we have mixed performance in the sovereign bond market. there hasn't been a flight to safety because we are seeing yields rise in another market. lloyds egg story today, the banking group here in the u.k. is buying mbna credit card business for 1.9 billion pounds in cash. it's the first major deal since being rescued by taxpayers eight years ago.
shares in lloyds today are up by 2.6%. the italian rod caster owned by the former prime minister is rising as much as .4%. buying additional shares in media set. by them.founded the management decided to lift its media set stake within the betting limits of 30% of share capital. .t's been quite a journey shares are up by 62% in december. there is the journey in the last six or so months. this is the euro against the pound today. are the most divided on record as where the currency is going in 2017. itsling is on point for
biggest decline. they reached 86 pence by the end of next year. the range is 73 pence to a pound per euro. strategists want to know if it is brexit affecting the u.k.. there is a 55% chance of euro sterling reaching 80 by the middle of next year and only a 3% chance of parity in the same timeframe. that is your chart. i don't have time to explain it. we are 19 minutes into the trading day. let's go over to abigail doolittle. she will be able to explain that part -- truck. abigail. as for trading action here, we are looking a lot of lush action. nasdaq are also
on pace for new record closing highs. the s&p is just shy of that. is dow story today 20,000, can the dow achieved 20,000. we see today that the dow is climbing above its last record high. the trading action itself is a little bit giddy. we are watching stocks back off just a little bit. we will see if that milestone can be a chain -- achieved. there is a lot of predictive power. there is not a lot of predictive power around these big milestone numbers, they are more psychological in nature, but everybody is watching to see if that milestone can come. it could be the fastest 1000 point gain for the dow on record here in when we look at 1000 point gain increments, the fastest on record was 1999. it took 35 days.
from 19,000. days the dow is up 5%. to put it more perspective, we take a look at the bloomberg. this is a long-term chart of the dow in yellow. we have the 1000 point milestones. that'sese are clustered, the 35 day. if it doesn't happen today, it would be a very similar set up. the markets are ripe for a little bit of a pullback in we are looking at stocks across the asset classes. one area that stands out, we do have commodities trading lower. ,he commodity index is down actually this is a little bit different. the index is down a little bit today. we have copper down for the fourth day in a row on the levels last seen since the and of november.
stockpiles had been rising for six days in a row. they started to pull back. thank you so much. we appreciate it. let's check on the first word news. someney: anglo merkel has of her top security officials to discuss the response to the doubly -- headley truck attack. she weighed -- laid white roses on the ground. therean prosecutor says may be several assailants involved in the attack. the interior minister said authorities are questioning a suspect of a man who is from pakistan. he denies involvement. authorities are not sure if he is the truck driver. areia, iran, and turkey ready to act in a peace deal between the syrian government and the opposition. they want to target syrian terrorism.
this comes a day after the ambassador to turkey was assassinated. authorities say a shooting at a mosque in zurich does not appear to be linked to terrorism. three people were injured. the suspect opened fire. body wasimself and his found in the crime scene. he may have had some interest in the occult. mitch mcconnell is rejecting calls for a special senate investigative committee on interference in the u.s. elections by russia. findings that moscow had -- hacked democratic emails is a serious issue, but it does not require a select committee. he said the intelligence committee should be able to investigate. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is
bloomberg. i am courtney donohoe. mark: let's get the markets. the dow jones hit another all-time high today. ofy are less than 15 points 20,000. what is ahead for markets in the new year? david kelly is the chief global strategist at jp management -- morgan asset management. what could derail this equity rally we are witnessing in the short term? kelly i don't think it will be derailed in the short term. the exit door is jammed because if you are in a taxable account and you sell at the end of the year, you will pay full capital gains tax. we do expect there will be lower capital gains tax rates next year. you really don't want a seleka's this time of the year anyway. that is helping the markets move higher. of thehere are issues
rise of populism, this highlights the need for diverse of occasion in 2017. paint the picture for us. david: if you look at markets right now, people are pricing in positive.ible in the u.s., there is going to be some stimulus. we don't know how much because there is now a deficit hawk appointed and there will be a real battle in the republican party about how much stimulus. you may not get much more economic. there is a big question about the kind of corporate tax cut get, which could have a big impact. around the world, we see the global economies doing very well. the global manufacturing numbers suggest the strongest growth in over five years. with theuities
emerging markets and developed countries are cheaper and the u.s. dollar is overvalued. for global investors, it's time to take a look at international equities outside the united states and not just jump onto this bandwagon with the dow. julie: where would one look them it? if you look to europe, you are looking toward the end of stimulus there. at least monetary stimulus. would that be a place you are interested in? david: i do like europe. always worried about europe because of elections. with 27 countries, there are always going to be elections. the european clock -- economy is growing. there is pent-up demand in the euro is cheap. see less military stimulus, but we will see more fiscal stimulus. europe has potential.
i think the euro is cheap. that is one positive. emerging markets in general, as theal manufacturing except, commodity cycle turns. emerging market stocks have then cheap. --'ve got to look a lot of past a lot of headline noise in europe and emerging markets. i would take both of them. i think there is opportunity both places. julie: i have to bring it back to some of the headlines. both what's happening in berlin and in turkey. when you look at the outlook for the european union and some of the things we've seen over the past year, have there been any depressive effects on the consumer spending? could there be if that's a possibility? david: i don't expect that. of course, it's headlines. what you going to do? likeesn't seem -- it seems isis is capable of inspiring
these rather crude and vicious attacks, these are not things are going to disrupt the economy. people have got to get on with their lives. i'm encouraged that the unemployment rate in the eurozone comes down in europe continues to grow. the euro it self is very cheap and the economy is healing itself. if we don't see some big crisis going forward, europe will continue to heal. i think that will improve living standards in europe. cheaperes the euro get to levels we haven't seen since the beginning of 2003? that's the big parity question. i know it's just a threshold, do you see the euro falling to parity against the dollar and even through it? david: it could. that is so inappropriate.
i think people make a mistake when they jump onto short-term momentum here. in the long-term, the eurozone has a significant trade surplus. the night states runs a significant trade deficit with europe. should not be this high. i don't think it will be in the long run. there is a lot of enthusiasm about short-term growth. we are out of workers. we have a 4.6% unemployment rate. if you try to rev up this engine, you're going to get more inflation and higher interest rates. in the long run, the next five months i don't know. is next five years, the euro or likely to be at $1.25. julie: getting back to another area, what is the political risk in emerging markets? i am referring to the political risk emanating from the united states and a potential trade
re-dealing we could see with some of these nations? david: there is some risk there. i think we have to look at this through the lens of pragmatism rather than politics. talklection, donald trump very tough on trade. what you going to do busted mark you going to put tariffs on mexico? it's not going to bring any jobs back. it's going to push up consumer prices for the people that elected you. roosevelt used to talk about speaking softly and carrying a big stick. the united states is talking loudly and carrying a small stick. i don't think they're going to put terrorists on emerging markets. mark: it's great to see you. thank you for joining us. chief globalthe strategist at jpmorgan. julie: we'll be talking with john chen as the profit forecast
mark: live from martin, we're counting down to the european close. julie: from new york, i am julie hyman. shares of blackberry are higher today. they boosted their earnings outlook and they have a profit in the third quarter. caroline hyde is standing by in san francisco with the blackberry ceo. caroline: i am joined by john chen, the chief executive of blackberry. the pivot is on. you are moving from hardware to software.
is this sustainable? can it go above 70%? normal growing software company can do better than 70%. it will take us a while to get there. caroline: how about the revenue growth? you said that was going to be about 30% on track. 30 percent growth for the next year? john: no. now the numbers are getting pretty big. i think the market is growing about 15% next year. we are committed to grow faster than the market area we are comfortable about that. caroline: anglo marco always used a blackberry because of the security in offered. you seen a pickup in demand? actually, in a certain way
the answer is yes. discussion,of people trying to get their arms around security and cyber security. mobility is one of the biggest vulnerability points. this is where we excel. it we are the number one player in that space. conversation. we feel very comfortable with where we are. carolina: talk to us about the mobility strategy. you said the focus on automation was driving vehicles. it's a very crowded space. you are up against apple and the tech giants as the automakers. how do you fight in the space? john: i don't fight with them at all.
signed aonth ago, we transaction with ford motor company. we are providing software to help them build the next-generation car. i will let them tell you what the next-generation car is. we are helping them to do that. we are helping them to do that. they are using our software. this is an example of what the autonomous driving innovation centers are going to focus on. all of the automakers are going to be our customers. they are going to be our partners. -- it's going to be partners. they have already been our partners and we are very proud of the relationships with them. we are not setting this up to compete with the automakers. we are not setting up to compete with peers. we are embracing. we want to build the foundation
so cars can safely put together on the road. : automation was something we've been discussing. there was another announcement coming from a blackberry. you are getting out of the hardware and letting your chinese partner told that. how much is your relationship under threat with china with the new president-elect? are you cautiously optimistic? john: that is a very complex question. software all the technology. the majority of all security is in. sense, there is no truth if i build my friend -- phone in china that it's not more secure or less secure. our security is paramount.
we don't have any issue with that. we control all of the software. that does allhis the devices. is iet of all of that would not be concerned about the chinese companies. it is related to what the government of the united states is. nobody really knows the answer to it. aboutd a guest talk putting a tariff on developing countries. i assume the guest is referring to china and the current currency manipulation situation. they are accused of that. there is a discussion going on with the president-elect. heads willat cooler
prevail. we won't get into a trade war with them. caroline: would you work with the trumpet administration like you did with bush? john: absolutely. like everybody said, he is the president now. he will be. anything that helps the country, we deftly will. carolina: it's always a joy to have you. john chen is the chief executive of blackberry. thank you very much indeed. you so much to caroline hyde and to john chen. mark: still ahead, we are minutes away from the european close on this tuesday session. check it out. stocks are rising. level for the european benchmark since the end of december last year. this is bloomberg. ♪
mark: we are counting down to the european close in roughly five minutes. this is what's happening to stocks rising today. we are shaking off the geopolitical instance we've seen here in germany and switzerland in turkey in the last .4 hours. we showing the resilience of global investors. have a look at what's happening to currencies today. the euro is the lowest against the dollar since 2003. bond yields are rising. the close is four minutes away. this is bloomberg. ♪
turkey and switzerland and of course in germany. they are showing resilience to geopolitical flashpoints. the test close since the end of december. these stocks, the measure of stock volatility is the lowest since 2014. members of the stoxx 600 are up 12.5%. the german 10 year yield, there the yield on the german 10 yield -- year rising. the yield fell off after two weeks of increases in the yield close that .399%. that was the highest since january. no flights to safety necessary today. looking at germany from a perspective, they
recorded the first annual increase in more than three years last month. this goes back to 2013. we haven't seen these levels since that year. german inflation is increasing thanks in part to the effects of the energy prices and consumer price growth in germany. the euro zone inflation is expected to pick up to 1.3%. inflation is picking up in germany. watch exports are picking up. they had their smallest retreat in mind months during november. ship mr. hong kong are returning to growth. to hong kong are returning to growth. this is hong kong's best performance of the year, showing the market could have hot him doubt after double-digit the klein.
the first 11 months of the year, shipments to hong kong have split i 26%. -- watchwish mark market seen its nadir? a look at's take what's going on with stocks here in the u.s. is the dow and how quickly is 20,000?going to get to it got up to 13 points before pulling back to a degree. it's important to note that we see depressed volume heading into the holidays. the dow volume is 12% below the 20 day average on the s&p. -- average. looking at the groups on the move, we have financials back in the leadership position here. theou can see, most of groups are green today. they are all up.
this is cyclical and interest-rate sensitive. the 10 year yield is back, climbing today. yield.ot the 10 year the selloff resumes. the bloomberg is at its highest in the index. this is the highest since 2002. let's check in on the first word news. courtney donohoe has more. courtney: the french government has heightened security. the country's prime minister says french and german authorities have worked closely for months to help them do security in both countries. queen elizabeth will step down from her role as patron of more
than 20 charities and organizations at the end of the year. she will follow her husband prince philip's example and reduce her charitable work at the end of her 90th earth day year. he did the same when he turned 90. she will still be more than -- patron of more than 600 organization. the michigan attorney general has filed more charges. two former emergency managers were charged with multiple felonies to protect residents from health hazards. nine others have been contaminated in the probe. might face a financial loss of he sells his washington hotel. he would be on both sides of the lease for the trump international hotel in washington dc, which opened in september. for the trump organization to get back its investment, a buyer would have to hey more than $800,000. it's unclear whether the
property could attract a bid that high. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. i am courtney donohoe. mark: thanks. the u.k. prime minister theresa may told lawmakers a deal with the eu could be reached in 18 months. i noted when i've been talking to individual leaders, the willingness from everybody to ensure that we undertake this as smoothly and orderly as possible. we do want to make this arrangement, get this arrangement in place so people can move on to the relationship they will have with the united kingdom. a willingnessis there to undertake this on that asus. said scotland's minister her brings it redline for the
power to review. the londoned by bureau chief. let's start with you. are we any the wiser from the brexit plans? : the timing is aggressive when you think about the skepticism we've heard from trade experts. given the complexity. that sounds pretty aggressive. the other is highlighting when she mentioned transitional arrangements. businesses have time to adapt to the new arrangements post brexit . mark: is that the closest we got to her embracing or revealing the fact that she is open to the
prospect of a transition? today she went a little bit further. she said there were practical aspects that meant it might be necessary. there might be companies on the continent that would welcome it. mark: there are obstacles within the party and the entirety of the u.k. we still have the supreme court ruling. she doesn't seem to be worried by that. it doesn't seem like in her mind it alters or timeframe. emma: she did not say much about the triggering by march. mark: we will see what happens in january. keep calm and gag doris. essentially, we are out there. we have talked and spoken with all of these people involved in
high-stakes enterprises. gambler, a got a hostage negotiator, a piece to go sheeter. mark: the big take away is something theresa may seems to be doing very well. she is playing her cards close to her chest. ; the advice is don't say very much. is totally vindicated. mark: the gagging poorest part is hard. when you have characters like boris johnson. emma: in recent weeks and months we have seen them come in line a bit more. mark: did we learn anything else from these experts in tackling complex negotiations? one of my favorites was from the poker player. cardplayern at the
and assesses the skill level of his rivals met informs him of the way he plays his hand. she will want to assess the skill level of her own team. mark: she said the talks of been positive and constructive worried that's not always what we hear from her leaders. because she might have reassurances, that doesn't necessarily mean they are going to let her cherry pick the elements that she wants. said sheola sturgeon will push for another referendum on independence if the country did not remain in the single market. we are going to bring in our scotland editor. it was a 50 page policy paper. your genius will be summing it up for us in under a minute.
>> the policy document was long-awaited. as she put it forward, it's really a wish list. this is how scotland could work in a single market. even if the u.k. comes out of thatu, it's a soft brexit would work for scotland. whether or not traits of may would agree to that is another issue. mark: it doesn't come without risks. rodney: she was very statesmanlike as she has been over the last six months in terms of putting forward scotland's position. beginning it was democratically unacceptable that scotland would be taken out of the eu against its will. it a chase of coming in saying this is what we would like.
she made the point today rather poignantly that after six months, scotland is the only component to the u.k. that managed to put forward a mightal of what brexit look. mark: there are practical issues in implementing legislation when it comes to businesses and the open border. there are real practicalities here. rodney: of course there are to make this work. it all depends on the negotiations. scotland or edinburgh negotiations. becausea risky gambit if the u.k. decides to call scotland's bluff and she has to pull phil her promise and have an independence referendum. i don't know opinion has shifted since the last referendum in 2014. 45% vote toto
-- italian banks. is our us now from milan italy are chief. what seems to be the problem here? what is the inability to raise the money? thought theople ago whenadmitted weeks he made some tweets about the plan and insisted he wanted that it was going to be tough. this is really a three leg and plan. all three legs have to function. the first part is the debt to equity swap portion of it read that was reopened last week. the second component is the tougher part, that is actually
selling stock to institutions and investors in finding someone who would become an anchor investor. the name that has popped around the most has been out of the middle east. the bad loan as portion, which would be the easiest component. getting all of those three done is very challenging. our reporting as you mentioned illustrates that. it's going to be very difficult to pull that off. the fact that the government is moving closer to a potential rescue is evident in that it's seeking permission from parliament to increase italy's debt load. suggest a to non-positive outcome when it comes to the recapitalization
plan. dan: they have insisted for weeks and months that there was no plan b. they were sticking with this effort to raise the 5 billion euros in the market. it just became too dangerous. last night, the government announced a would be seeking this authorization from parliament to increase the public debt mountain, which is among the highest in europe. he will be speaking later this evening in parliament, perhaps flushing out more details. the italian the cabinet will be meeting again, probably on friday to pass a decree authorizing the support for not only him, but other banks as well. mark: the cap net is considering this precautionary recapitalization.
what does it mean to potential losses for bondholders? dan: there probably will be losses for bondholders. it is one of the options. whatill do know exactly the italian government is going to take. they are holding discussions behind the scene with the ecb. the precautionary recapitalization has been spoken of in the past. they want to avoid burning retail people too much. if they do go that route, bondholders potentially are going to suffer some losses. mark: thanks a lot. we will see you again no doubt very soon. dan is the italy. chief. it's time for the business
flash. lloyds has agreed to by bank of america's credit card business in the u.k. $2.4 billion in cash. it's the first major deal since being rescued by british taxpayers eight years ago. $801cquisition will add million a year to lloyds' revenue. a couple of chief executives -- executive tim cook met with donald trump. he details his reasoning. he doesn't want to be on the sidelines during the next administration. included jeffnts bezos. safety regulators have open a into vehiclesion
rolling away after the owners shift into park. pickup and the dodge terrain go -- terrain go. they are urging people to use the parking brake. that is the latest bloomberg business flash and we are getting some breaking news to pass along. we are getting this from the white house. this is after the attack in berlin yesterday. president obama did speak to anglo merkel on monday night. he offered his condolences. withfered his insistence her. we will follow the details about this attack. up, it's be otc next, battle of the charts. it could be getting a little bit giddy.
mark: i am rubbing my hands. it's time for battle of the charts. we are looking at some of the most compelling charts of the day. you can access these charts on the bloomberg by running the functions featured at the bottom of your screen. kicking things off today is abigail doolittle are -- doolittle. abigail: this is a two-year chart. on the bottom we have the s&p 500. on top we have the put/call line. the put line is falling. it basically tells us the bears are disappearing from this market. it'ss worth noting is
heating a low. sometimes when you have various indicators hitting the extremes, it suggests we are about to see a reversal. this will come as some sort of pullback on the s&p 500. you can find my chart on the bloomberg. somebody tells me your chart isn't too dissimilar. at thei am looking market through the lens of options. he does derivative strategy is well. this is a chart he is looking at that looks at the money option. that is where they are trading right now versus options that show a little bit of an upside.
this is a chart going all the way back to 2007. the spread here is getting tighter and tighter. you find volatility between the two and they are getting tighter and tighter. what he is saying as everybody is piling into this market because they do fear missing out on the rally. that is affecting the options activities. he said there could be a reversal here. that's what this chart shows. essentially you are both telling a similar story from a similar perspective. julie included foam oh for the first time ever. we've never had it before.
i can't separate you. as the judge and jury and no one can tell me off, you are equal today. you are both winners. there you go. let's have a look at how european equities finished today. it was a day of gain and a day that followed geopolitical incidents in berlin and in zurich. the market shrugged that off and risk assets rose. the stoxx 600 is the highest level since the end of 2015. this is bloomberg. ♪
from bloomberg's world here'srters in new york, what we are watching. the berlin attacker or attackers may still be at large. we are live on the ground with the latest in just a few minutes. japan, the boj decides to keep its yield curve program unchanged. we will look at the winners and losers as the year comes to an end. abigail doolittle joins us. abigail: we have some good news and bad news. we have stocks changing higher. all three major averages are up. they have all carved out new highs. thet now, we don't have